Nexus between Corporate Digital Transformation and Green Technological Innovation Performance: The Mediating Role of Optimizing Resource Allocation

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Nexus between Corporate Digital Transformation and Green Technological Innovation Performance: The Mediating Role of Optimizing Resource Allocation


1. Introduction

Amidst its rapid economic expansion, China faces mounting challenges associated with ecological resource limitations and the escalating issue of environmental pollution [1,2]. It is of paramount importance to expedite the transition in economic growth models and promote industrial restructuring and advancement. Consequently, China is entrusted with the substantial task of crafting an effective, sustainable development plan that aligns with the principles of ecological preservation and environmental protection [3]. This entails the creation of innovative pathways for economic growth while simultaneously raising environmental standards [4,5]. Furthermore, as the world’s foremost carbon emitter, China has committed to reaching its peak carbon emissions by 2030 and achieving carbon neutrality by 2060. This ambitious transformation, unfolding over an approximate 30-year span, places significant pressure on China to curtail its emissions effectively [6,7,8].
To accomplish the objectives outlined above, China is actively promoting a strategy centered on green technological innovation, positioning it as a pivotal solution to environmental challenges. Green technological innovation is a critical component of the global new industrial revolution and technological competition, serving as a fundamental strategy for driving economic transformation and ensuring environmental sustainability [9,10]. This innovative approach, which blends environmental awareness with inventive progress, not only enhances energy efficiency and ecological performance in industrial production, leading to energy savings and reduced emissions, but also encourages the development of environmentally friendly, distinctive products [11,12]. Such advancements stimulate technological progress, significantly enhancing companies’ capacity for self-driven innovation and their competitiveness in green initiatives. This results in a dual benefit of economic growth and environmental conservation [13,14].
Corporate digital transformation is now recognized as a fundamental approach to drive green technological innovation. Firstly, digital transformation, propelled by the rapid advancements in information technologies such as the internet, artificial intelligence, and cloud computing, has become a crucial catalyst for economic advancement, industrial evolution, and the mitigation of environmental issues [15,16]. The “Digital China Development Report (2022)” highlights that in 2022, China’s digital economy expanded to approximately CNY 50 trillion, constituting around 42% of its GDP, emerging as a cornerstone in the construction of a modern economic framework [17,18]. In the course of digital transformation, digital technologies facilitate industrial metamorphosis and improvement by streamlining the flow and integration of data, knowledge, and resources. They revolutionize production methods, administrative processes, and corporate structures, ultimately leading to improved organizational management, specialized labor divisions, and reduced environmental pollution [19,20]. Consequently, China regards digital transformation as a fundamental pillar for achieving its carbon-neutrality goals and economic restructuring, intensifying digital implementation in manufacturing, and propelling green technological innovation [21,22,23]. Thus, the digital transformation within corporations, emblematic of the broader industrial digitization trend, is now an efficient and practical means for fostering green technological innovation [24,25]. On one hand, corporations constitute a vital component of the national industrial system, serving as a primary driver of economic transformation and environmental protection. The active involvement of corporations is indispensable for the advancement of green technological innovation. On the other hand, corporations possess strong incentives for undergoing digital transformation. This is because the benefits of digital technology contribute to enhancing production efficiency and economic returns for businesses. This motivation encourages corporations to allocate significant resources to embark on digital transformation, creating a positive feedback loop that yields mutually beneficial outcomes. Furthermore, the implementation of digital tools for precise carbon emission data collection and analysis within corporations offers significant advantages, including expediting emission reductions in production processes, minimizing carbon footprints in consumption, and fostering energy efficiency [26,27].

Building upon the insights provided above, it becomes evident that the digital transformation of corporations holds the potential to significantly contribute to the promotion of green technological innovation. Investigating this cause-and-effect relationship is of paramount importance in driving the broader transformation toward a greener economy. Consequently, the primary aim of this paper is to thoroughly examine the impact of corporate digital transformation on the progression of green technological innovation.

Green technological innovation and digital transformation are both topics of significant interest among scholars. Firstly, scholars have primarily concentrated on understanding the factors that influence green technological innovation [28]. Given that green technology innovation is the key pathway to achieving carbon neutrality and mitigating environmental challenges in China, and considering that the current impact of green technology innovation is not particularly remarkable, the effective promotion of green technology innovation has become an urgent matter [29]. Consequently, there has been substantial scholarly interest in investigating the factors that influence green technological innovation. Research has extensively explored the roles played by internal and external drivers such as environmental regulations, fiscal decentralization, investments in research and development, intellectual property rights, and public sentiment in fostering advances in green technology. These studies have consistently produced valuable insights [30,31,32,33,34]. Secondly, the impact of transformation on various aspects, such as economic benefits, environmental performance, and innovation capabilities, has been a focal point of scholars’ attention. With the advent of Industry 4.0, digital technologies and digital transformation have profoundly influenced various facets of industrial development, encompassing areas such as production efficiency, management models, and development strategies. Therefore, studying how digital transformation affects these dimensions holds practical significance and contributes significantly to enhancing an economy’s developmental capabilities. For instance, Cheng et al. [35] revealed that digital transformation in physical economy enterprises has an impact on total factor productivity. Shang et al. [26] found that digital transformation can significantly reduce carbon emission intensity. Zhuo and Chen [36] indicated that digital transformation can overcome innovation challenges by improving innovation quality and enhancing absorption and conversion capabilities.
Building upon the aforementioned research, scholars have started to integrate digital transformation and green technological innovation, delving into how digital transformation affects green technological innovation. Luo et al. [37] discussed the direct effect, indirect effect, spatial effect, nonlinear relationship, and policy effect of digital transformation on urban green technological innovation. Yin et al. [38] conducted a theoretical analysis using the pressure-state-response (PSR) model of digital transformation to elucidate its role in promoting green innovation in the manufacturing industry. Xue et al. [39] empirically investigated the impact of digital transformation on green technological innovation at the level of listed companies. However, research in this field is still in a nascent stage and exhibits certain limitations. Firstly, the impact of digital transformation on green technological innovation remains a subject of debate. While some scholars argue that digital transformation can facilitate green technological innovation due to technological advantages, others contend that the expansion of digital scale may not necessarily promote green technological innovation [40], thus warranting further exploration. Secondly, existing studies on the interaction between digital transformation and green technological innovation predominantly focus on the theoretical and macro levels, with limited research on the influence and mechanisms of corporate digital transformation on green technological innovation at the micro level. Thirdly, investigations into the impact of corporate digital transformation on green technological innovation tend to emphasize the quantity or scale of green technological innovation, often overlooking the crucial aspect of the quality of green technological innovation [41].

Therefore, this paper empirically studies the impact mechanism of corporate digital transformation on green technological innovation from the micro level and pays attention to the quantity and quality of green technological innovation at the same time. This study utilizes information from A-share corporations listed in China between 2009 and 2020 to assess their digital transformation using textual analysis methodology. This study investigates how this transformation influences both the amount and the quality of green technological innovation, considering two distinct aspects. To prevent the unreliability of the conclusions, comprehensive robustness and endogeneity examinations are incorporated to validate the findings. Additionally, this study probes into the optimization effect of digital transformation on various resource allocations, such as human, information, and fund resource allocations, to understand how it informs green technological innovation. The final segment of this study involves a heterogeneous analysis, taking into account various factors such as the nature of ownership, sectoral differences, geographical variations, and the stages in the lifecycle of the corporations.

This study makes several distinct contributions. Firstly, while previous studies have primarily focused on quantifying green technological innovation by counting green patent filings, only a few have delved into assessing the quality of such innovation. This paper not only addresses the volume of green technological innovation but also explores its quality by analyzing the frequency of citations received by green patents. This approach is valuable for expanding the research landscape in the field of green innovation. Secondly, this paper underscores the advantages of digital technology in optimizing resource allocation. It specifically highlights how optimizing resource allocation plays an intermediary role in the mechanisms of corporate digital transformation on green technological innovation. This exploration contributes to a better understanding of how corporate digital transformation influences green technological innovation, providing empirical evidence for future studies aiming to facilitate corporate green technological innovation. Thirdly, at the level of heterogeneity analysis, this paper draws upon the enterprise lifecycle theory to observe variations in the performance of enterprises across different lifecycle phases. This observation holds significant practical implications and provides a theoretical foundation for encouraging enterprises to accelerate their digital transformation efforts. Overall, this study offers significant insights into the evaluation of green technological innovation, the intermediary role of optimizing resource allocation, and the impact of corporate digital transformation on green technological innovation. These contributions provide a solid basis for future research in the field of corporate sustainability and innovation.

The subsequent sections of this study are organized in the manner below: Section 2 offers a theoretical framework and formulates research hypotheses. Section 3 outlines the methodology employed in the research, encompassing the model setup, variable selection, and data collection. In Section 4, empirical findings are detailed, encompassing basic regression results, robustness checks, and tests for endogeneity. Section 5 and Section 6 are dedicated to examining the mechanisms and heterogeneity of the findings, respectively. The final section, Section 7, summarizes the conclusions and discusses the recommendations of this study.

5. Mechanism Exploration

Drawing from theoretical insights and formulated research hypotheses, this paper posits that digital transformation within corporations serves as a catalyst, potentially fostering green technological innovation through three distinct mechanisms: enhancing the composition of human capital, diminishing information asymmetry, and augmenting investment in R&D. To empirically investigate these mechanisms, this research utilizes a mediating effect model. The model’s construction is designed to ascertain the presence and influence of these three potential mechanisms.

M i t = α 0 + α 1 D I G i t + α 2 C o n t r o l i t + μ i + θ t + δ j + ε i t

Y i t = β 0 + β 1 D I G i t + β 2 M i t + β 3 C o n t r o l i t + μ i + θ t + δ j + ε i t

In this model, Mit symbolizes the mediator variables pertinent to the three identified mechanisms, including human capital composition (HRS), information asymmetry (INS), and R&D investment (REI). Other variables remain aligned with those in Equation (1).

When measuring mediator variables, we contemplate three key dimensions. Firstly, the surge in demand for high-skilled labor due to digital transformation often catalyzes a refinement in the composition of human capital, primarily through elevated educational benchmarks. To gauge this aspect, the proportion of employees holding a bachelor’s degree or more advanced qualifications is utilized as a metric for the human capital composition (HRS). The higher this proportion, the more enhanced the composition of human capital. Secondly, in the context of explosive growth in information volume and imbalances in information quality, analyst attention becomes a vital means of accessing information in the capital market. Analyst attention plays a supervisory role in ensuring that corporate agents fulfill their entrusted economic responsibilities, reducing instances of earnings manipulation and lowering agency costs. Simultaneously, analyst attention can guide market judgments and mitigate resource imbalances arising from information asymmetry [79]. Research has shown that analysts enhance the information disclosure transparency of the market, and companies receiving greater analyst attention tend to exhibit higher stock market liquidity due to increased trading activity [80]. As a result, analyst attention is closely linked to corporate information asymmetry. The more analyst attention a corporation garners, the lower the level of information asymmetry. In this paper, analyst attention is utilized to represent information asymmetry (INS), and it is calculated based on the number of analysts following the corporation throughout the year. Thirdly, the impetus provided by digital transformation is manifested in the corporate investment in R&D, and a stronger impetus correlates with heightened R&D expenditure. The intensity of R&D investment (REI) is calculated in terms of its percentage of total business revenue. The higher this percentage, the greater the corporate investment in R&D. This study employs stepwise regression in the model to discern the existence of a mediating effect and, if present, to determine whether it is partial or complete. If both α 1 and β 2 are statistically significant, it indicates the existence of a mediating effect represented by the mediator variable. Furthermore, if β 1 is also statistically significant, the mediating effect is considered partial; however, if it is not significant, then it is deemed a complete mediating effect.
In examining the influence channel of enhancing the composition of human capital, the outcomes are delineated in Table 5, columns (1) to (3). Column (1) elucidates the influence of corporate digital transformation (DIG) on the composition of human capital (HRS). A significant positive coefficient in DIG implies that digital transformation can enhance the proportion of highly educated employees in corporations, which represents enhancing the composition of human capital. The incorporation of both DIG, as the independent variable, and HRS, as the mediator, forms the basis of columns (2) and (3). The analysis reveals significant positive outcomes for both DIG and HRS coefficients. Notably, the diminished magnitude of the DIG’s coefficient, compared to the fundamental regression, underscores a partial mediating effect of enhancing the composition of human capital. Thus, hypothesis 2 is confirmed.
In the context of the mechanism of diminishing information asymmetry, the analysis, outlined in columns (4) to (6) of Table 5, displays pertinent insights. Column (4) concentrates on how corporate digital transformation (DIG) impacts information asymmetry (INS). A notably positive coefficient for DIG illustrates that digital transformation can augment the analyst’s attention to corporations, which represents an evident reduction in information asymmetry. Simultaneously incorporating the independent variable DIG and the mediator variable INS into the model, we obtain columns (5) and (6), where the results reveal that the coefficients for DIG and INS are both statistically significant and positive. The reduced magnitude of the DIG’s coefficient, relative to the fundamental regression, signals a partial mediating effect of diminishing information asymmetry. Hypothesis 3 is corroborated.
Lastly, the role of augmented investment in R&D as a mediating factor is explored in columns (7) to (9) of Table 5. Column (7) highlights the influence of corporate digital transformation (DIG) on investment in R&D (REI), evidenced by a substantially positive coefficient for DIG, signifying a notable boost in investment in R&D due to digital transformation. Introducing both DIG and REI variables into the model results in the outcomes detailed in columns (8) and (9). Here, the analysis identifies positive coefficients for both DIG and REI. The comparative reduction in the DIG’s coefficient against the fundamental regression suggests a partial mediating effect of augmenting investment in R&D. Hence, hypothesis 4 is verified.

7. Conclusions and Recommendations

7.1. Conclusions

In the context of the rapid development of digitalization and the urgent need for green technological innovation, this study delves into the influence of digital transformation within corporations on the advancement of green technological innovation, with a specific focus on companies listed on A-share markets in China during the period from 2009 to 2020. Utilizing textual analytics, this research assesses the extent of digital transformation and provides a comprehensive evaluation of corporations’ capabilities in green technological innovation, taking into account both the quantity and quality of such innovations. The empirical outcomes reveal: (1) There is a significant increase in both the volume and quality of green technological innovations attributed to corporate digital transformation, with a more pronounced improvement in quality; (2) with the mediating role of optimizing resource allocation, digital transformation within corporations bolsters green technological innovation by refining composition of human capital, diminishing information asymmetry, and augmenting research and development (R&D) investment; (3) heterogeneity analysis demonstrates that digitalization has a more substantial impact on promoting green technological innovation within state-owned corporations, those with lower environmental footprints, and businesses located in low-carbon pilot cities; (4) further research illustrates that the positive influence of corporate digitalization on green technological innovation diminishes as companies progress through their lifecycle, with the most pronounced effects observed during the growth phase.

7.2. Recommendations

Based on the conclusions mentioned above, this paper further presents recommendations for advancing corporate digital transformation and green technological innovation. (1) Accelerate digital transformation and deep integration of digital and green initiatives: given the effective role of corporate digital transformation in driving green technological innovation, advancing the digitalization process across all sectors of the national economy is of paramount importance. Governments and businesses should establish common goals and jointly create an institutional and technological environment conducive to the rapid advancement of digital transformation. Simultaneously, the government should encourage companies to integrate digital transformation with green product manufacturing, technology, and efficient management practices. This integration will facilitate a smooth transition of businesses toward digitalization and sustainability, ultimately promoting high-quality corporate development. (2) Tailor policies for different enterprises: recognizing the diversity of enterprises and variations in their performance regarding digital transformation and green technological innovation, it is essential to formulate corresponding policy measures tailored to their unique needs. Implement specific incentives for companies with distinct characteristics, including targeted financial incentives, tax benefits, and subsidies, to motivate their investments in digital transformation and green innovation. (3) Augment investment in R&D and talent: as research and development (R&D) investment and human capital play a pivotal role in facilitating green innovation through digital transformation, it is imperative to employ various means to encourage businesses to increase their R&D investments in digital technologies and green innovation. These measures can include the establishment of R&D funds and tax incentives for research investments. Augmenting R&D spending can accelerate the renewal and enhancement of digital technologies while enhancing the quality of green technological innovations. Furthermore, prioritize the recruitment and training of digital and innovative talents within organizations. Collaborating with universities, academic institutions, and research organizations can help augment the pool of talent resources and drive innovation in the realms of digital and green technologies. (4) Enhance information disclosure: eliminating information asymmetry is a crucial channel through which digital transformation influences green innovation. Therefore, leveraging the technological advantages of digital transformation to improve information disclosure within the capital market is imperative. Heightened transparency can enhance market awareness, bolster investor confidence in businesses, and facilitate the allocation of more resources toward digital transformation and green technological innovation. (5) Early adoption of digital transformation: embarking on digital transformation during the early stages of a company’s lifecycle can yield substantial benefits. We encourage businesses to commence digital transformation planning and implementation as early as possible. This approach not only reduces transformation costs but also maximizes the advantages conferred by digitalization, enabling more effective adaptation to the ever-evolving dynamics of the market.

7.3. Limitations

This study still possesses some limitations, necessitating further exploration in future research: Firstly, the study’s focus was primarily on Chinese corporations, without the inclusion of corporations from other countries for comparative analysis. Given the global trends of the digital revolution and the ascent of the digital economy, it is imperative to investigate whether the influence of digital transformation on green technological innovation is universally applicable. Additionally, gaining a comprehensive understanding of the similarities and distinctions between Chinese corporations and their counterparts in other countries in this context warrants more extensive deliberation. Secondly, due to data availability constraints, this study predominantly relied on publicly listed companies as its sample, thereby excluding non-publicly listed enterprises. It remains to be investigated whether the findings derived from this study can be extrapolated to non-publicly listed companies. Thirdly, this study assessed the extent of corporate digital transformation by examining the frequency of digital keywords within corporate annual reports. There is a pressing need to develop more precise methodologies for accurately gauging the level of corporate digital transformation. Fourthly, despite employing a variety of methods to ensure sample quality, this study may still be susceptible to certain sample selection biases. For instance, the exclusion of certain companies due to incomplete information during the sample-selection process, as well as the exclusion of companies lacking patent applications and citations during robustness tests, may introduce biases. Enhancements in sample quality in future research endeavors hold the potential to effectively address this issue.


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